Other things equal, an increase in a consumer's money income:
A. increases the amount of utility a consumer receives from a given quantity of a good.
B. shifts the individual's budget line rightward because she can now purchase more of both
products.
C. eliminates the individual's economizing problem.
D. causes the consumer to choose a different combination of goods along a given budget line.
Answer: B
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At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to
A) the real wage and the budget line is tangent to an indifference curve. B) minus the real wage and the budget line is tangent to the indifference curve. C) the real wage and the budget line intersects the indifference curve. D) minus the real wage and the budget line intersects the indifference curve.
Efficient production of a public good requires a. that individuals pay for such goods according to benefits received
b. that each individual's MRS be equal to the RPT of public goods for private goods. c. that the sum of individuals' MRSs be equal to the RPT of public goods for private goods. d. that governments produce at the low point of the average cost curve for the public good.
Reduced military spending shifts the aggregate demand curve to the left
a. True b. False Indicate whether the statement is true or false
The theory of portfolio choice indicates that higher interest rates make money ________ desirable, and the demand for real money balances ________
A) less; falls B) more; falls C) less; rises D) more; rises